Annuity factor
From ACT Wiki
Financial maths. (AF). A method for calculating the total present value of a simple fixed annuity. Mathematically it is the cumulative discount factor for maturities 1 to n inclusive, when the periodic cost of capital is the same for all relevant maturities.
The present value of the annuity is then:
= AF x Time 1 cash flow.
The annuity factor for 'n' periods at a periodic yield of 'r' is calculated as: AF(n,r) = 1/r x [1-(1+r)-n]
Also known as the Annuity formula.
See also
